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Neglect for Sale

On April 14, 1998, two days after Easter, Janice Lacy called the Appleridge group home in Houston, Texas, to see how her sister Trenia had spent the holiday. "They told me she'd had a nice Easter and was asleep," says Janice, recalling her conversation with a caregiver at the home where Trenia and five other mentally retarded women lived. The next morning, around 10:00 a.m., Janice received a call at work informing her that Trenia had been rushed to the hospital in the middle of the night. Twenty-four hours later, Trenia Wright was dead.

Janice was never told the circumstances that led to her sister's sudden death. But after the body was brought to Dallas to be buried alongside Trenia's father, the family grew curious enough to contact a lawyer. Hospital records and an investigation by the Texas Department of Human Services soon revealed that Trenia's Easter Sunday was anything but nice. That evening a group of male visitors had come from a nearby home to share an Easter dinner with the ladies at Appleridge. Trenia, who was diagnosed with both cerebral palsy and mental retardation, generally liked male company, but on this night, she grew distraught. Just as the visitors were leaving, she defecated in the hallway and fell to the ground, screaming.

At this point, a state investigation found, the direct-care staff on duty poured a mixture of cleaning agents and chemical bleach on the floor--and left Trenia, who had trouble lifting herself on her own, to wallow in it for more than two hours. For the next three days, the staff made no effort to wash Trenia even as she complained that burns from the chemicals were causing her clothes to stick to her skin. By the time she arrived at the emergency room on Wednesday morning, 40 percent of Trenia's body was covered in burns so severe that one witness said it "looked like she had been napalmed."

Janice Lacy did not know any of these details until it was too late. She also didn't know that Texas Home Management (THM), the company that operated Appleridge, is part of a national for-profit chain with a history of problems.

The parent corporation, ResCare, contracts with federal and state governments to serve a variety of special-needs populations, from the developmentally disabled to troubled youth. Buoyed by a flurry of recent acquisitions, ResCare is now the nation's largest provider of services to people with developmental disabilities. It operates group homes and other facilities, which are primarily underwritten by Medicaid, in 28 states, and earned more than $485 million in the first nine months of 1999.

A New Bonanza

ResCare is not alone. In recent years, numerous large, publicly traded companies--including MENTOR, a division of Magellan Health Services, one of the nation's largest behavioral health corporations--have emerged as dominant players in the disabilities sector, a trend that mirrors the for-profit takeover of hospitals and nursing homes. The companies, which have drawn praise from stock analysts, are capitalizing on a little-noted trend: Since 1977, government spending on the disabled has risen from $3.4 billion to more than $22 billion, turning care for the mentally retarded into a major growth industry.

It's a development that has caught advocates for the disabled by surprise. In the early 1970s, these advocates fought to close down abusive state institutions where the mentally retarded were being warehoused, and replaced them with a network of small, community-based providers, many of them nonprofits with a social mission. Today, as corporate chains swallow up these smaller providers, many worry that the range of civic functions traditionally performed by nonprofits (education, outreach, advocacy) will be abandoned and that the quest for profits will come at the expense of a vulnerable population that cannot advocate for itself.

Prior to the 1970s, disabled people under the care of the state were placed in large institutions. Thanks to the deinstitutionalization movement and the expansion of federal and state Medicaid and disability (SSI) funding, a decentralized system emerged, ranging from traditional institutions (for the severely disabled and those with acute medical needs) to so-called intermediate care facilities (group homes with six people or more) to "waiver" homes, typically with three people or less, which are less strictly regulated. The ideology of client empowerment, legally enshrined in the 1990 Americans with Disabilities Act, was intended to foster client and family choice in deciding where individuals are placed. But it also opened the door to for-profit companies, which have deftly embraced the rhetoric of empowerment while carving out a growing share of this increasingly decentralized--but publicly funded--system.

ResCare, which stands for "Respect + Care," touts its "innovative, efficient services" as a boon for states looking to control costs while moving individuals out of expensive state facilities into a variety of community-based programs, and insists that Trenia Wright's death was "an isolated incident" that "has nothing to do with ResCare's overall quality of supports."

But a review of thousands of pages of state documents from across the country--along with interviews with advocates, case managers, and former ResCare employees--opens a window onto a broader pattern of neglect:

In Texas, ResCare's subsidiary, THM, has "had sanctions or penalties that are pervasive across the chain," state documents reveal.

In Indiana, eight clients died within nine months in a group of ResCare homes that parents, advocates, and case managers complained were wracked with deficiencies. The homes are part of a rapidly expanding Medicaid program that has virtually no federal standards and limited state oversight.

In Florida, state investigators found that several ResCare homes posed an "Immediate Jeopardy" to clients' safety and health, and recommended termination from Medicaid.

To be sure, not every operator of services to the disabled exhibits such problems. Yet in a recent Washington Post series, Pulitzer Prize-winning reporter Katherine Boo exposed rampant abuse and profiteering among private providers serving people with disabilities in Washington, D.C. Our investigative article, which examines one major company in detail, suggests this is a national problem and highlights the dangers that can arise when highly sensitive public functions are transferred to the private sector without adequate oversight.

To this day, Janice Lacy has never seen the pictures taken of the burns on Trenia's body. "I don't know what they looked like, and I don't want to see," she explained, her eyes welling with emotion as she spoke to us in the Dallas office of the family's attorney, Kimberly Stovall. Dressed in a navy blue dress and aqua silk scarf, Janice looked like she was on her way to church, a place she enjoyed going with Trenia. "Trenia was a happy person, and she loved to go to church," Janice recalled. "She just loved people. You know, everybody she would meet was her friend."

She also, despite her disabilities, knew when people were mistreating her. And mistreatment was about all Trenia got after the incident on Easter Sunday. When she was finally lifted out of the bleach that night, the direct-care staff contacted their residential team leader, a person with no medical training; they did not contact the facility's nurse or seek immediate medical attention. Instead of being thoroughly bathed, Trenia was rubbed down with Vaseline, which only sealed in the chemicals. The next morning, she was scheduled to see the company's contracted doctor but, rather than being taken there directly, was loaded into a van with her housemates, who were going to their day program.

Rose Wilson, an employee at the day program, was the first person outside Appleridge to see Trenia. "She showed me burns from the neck down to the calf of her leg," says Wilson. "She told me, 'Rose, they set me on fire, with bleach, Rose.' And I said, 'Oh my God, what did they do? Pour the bleach and strike a match?' It looked like someone had just walked through a blaze and walked out."

This description of Trenia's burns could not contrast more sharply with the report that Dr. R.R. Yalamanchilli, ResCare's contract physician for its 10 group homes in Houston, wrote after seeing Trenia later that morning: "Pt. rolled over in Clorox ... very superficial chemical burn." Dr. Yalamanchilli prescribed whirlpool treatments, which were never given, and painkillers, which Trenia received six hours later, and told Trenia to come back in a week.

ResCare will not discuss the Trenia Wright case because it is in litigation. But Steve Dillawn, the company's attorney, has told the Houston Chronicle that ResCare was not at fault and fired the four staff members who didn't follow company policies and procedures. Two of the staff have since been indicted, and one has been convicted of felony injury to a disabled person.

A closer look at Trenia's medical history, however, suggests long-standing neglect. In 1991 the Dallas County Mental Health and Mental Retardation Center conducted a comprehensive medical evaluation, which strongly recommended that Trenia's caregivers place her on "a behavior management plan" to address her "physically aggressive and acting out behaviors." Trenia, like many people with mental retardation, was prone to seizures, but she also exhibited a tendency to fake seizures and fall to the floor as an attention-seeking device, causing frequent head injuries that required sutures. "Trenia went to Appleridge [in 1992] with this evaluation in hand," says Kimberly Stovall, the family's attorney. "But ResCare never provided her with active treatment or training to stop her self-injurious behavior, despite the fact that, during the time they ran the home, records indicate Trenia fell more than 120 times, requiring some 25 hospitalizations."

Vendor Holds

Trenia was not the only client receiving questionable care: A state investigation of Appleridge following her death charged ResCare's THM subsidiary with a disturbing pattern of medical neglect, delays in administering medications, and lack of treatment programs to address behavioral needs--putting "all facility clients' health and safety at risk."

These findings prompted the Texas attorney general to shut down Appleridge, but ResCare maintains that it was unfairly punished for a lone accident at one facility. "ResCare delivers more than six million days of service a year and has a good compliance record," says Nel Taylor, a ResCare spokesperson. "It's very easy to document negative things, especially because we are such a big provider. We have thousands and thousands of success stories under our belt." In hearings ResCare insisted that its other facilities in Houston "for the most part have been found to be deficiency free."

In fact, however, documents obtained under the Texas Open Records Act indicate that, from 1994 to 1998, 56 ResCare group homes received a startling 52 "vendor holds"--major punitive actions in which state surveyors found deficiencies so serious that they threatened termination unless immediate improvements were made. At various homes in the chain, investigators discovered evidence of physical and verbal abuse by caregivers, insufficient numbers of trained staff, failure to treat injuries and medical problems, and a lack of active treatment programs. At one home, in Abilene, Texas, a profoundly retarded 23-year-old male client was physically abused by a staff member, resulting in "a bloody nose, multiple abrasions, and a black eye," yet staff "did not report the incident immediately" and initially told state investigators the man was attacked by another client. At another, "the facility failed to provide a client with needed dental surgery to remove decayed teeth," even though surgery had been recommended for over a year. At one more, "staff were not trained to deal with the selfinjurious behaviors of one client [who] sustained serious injuries" but for whom "staff did not seek timely medical intervention."

Janice Lacy is amazed that a company whose lifeblood is government contracts can get away with such things. "They're stealing money from the taxpayer," she complained, her calm demeanor giving way to anger. "They were getting enough money to make sure Trenia and other clients got proper treatment, but they don't train the caregivers, they cut medical care... . And people's lives are being lost."

The irony is that Janice and her family had great hopes when Trenia was moved out of another facility, Familiar Footsteps, into her community home at Appleridge. Integration into society, after all, is precisely what advocates for the mentally retarded had fought so hard to achieve.

In the early 1970s, after Geraldo Rivera broadcast shocking images of mentally retarded children living like caged animals in feces-smeared wards at the Willowbrook Developmental Center in Staten Island, New York, a movement arose to recognize the rights of people with disabilities. Within a decade, parents and advocates filed lawsuits nationwide forcing states to replace these virtual prisons with an array of community programs designed to foster independence and enable individuals to live in society.

Deinstitutionalization of the retarded paralleled deinstitutionalization of the mentally ill, as state psychiatric hospitals were closed in favor of what was supposed to be a benign system of community mental health. As events played out, large state institutions were indeed shut down in the 1970s, but the promise of high-quality community-based care collided with the fiscal cutbacks of the 1980s.

Although deinstitutionalization has been hampered by inadequate funding, numerous studies have found that most people with developmental disabilities have benefited from leaving state institutions. Pennsylvania's landmark Pennhurst Longitudinal Study, conducted over a five-year period by a team of experts, found that clients were more independent, displayed marked behavioral growth, and reported being happier with community programs, as did the overwhelming majority of families.

"The accomplishments of the past 25 years are nothing short of astounding," said Clarence Sundram, the former chairman of the New York State Commission on Quality of Care for the Mentally Disabled and a leading authority in the field. "Almost the entire agenda of the most visionary advocates has come to pass, from the decline of institutions to the growth of community services, to the passage of new laws, such as the Americans with Disabilities Act [1990]."

The Disability Business

One thing that advocates did not anticipate, however, is that serving people with disabilities would one day become big business. Originally, proponents of deinstitutionalization envisioned a broad network of community-based providers that would offer clients a wide array of services and choice. However, "in many states," explains Bob Gettings, head of the National Association of State Directors of Developmental Disabilities Services, "this well-developed provider network simply did not exist, so states turned to large companies like ResCare to satisfy the dire need for services" as people flooded out of state institutions. By 1993 a congressional report prepared for the House Subcommittee on Regulation, Business Opportunities, and Technology warned that large "multi-state, multi-home" corporations were buying up "mom and pop" operations in many regions, dangerously eroding competition and client choice.

Today, corporate chains like ResCare are expanding as never before. "As states are downsizing and moving people into the community," says Jeffrey Cross, executive vice president of ResCare's disabilities division, "we have access to working capital that smaller providers don't. This significantly reduces risk for states and allows a much faster implementation of community services." But many nonprofit providers, who are also ResCare's competitors, see this expansion as a threat.

Last December a group of executive directors from chapters of the Association for Retarded Citizens (ARC), the nation's oldest network of nonprofit providers, gathered in California to discuss ResCare's and MENTOR's growing prominence in their state. Chief among their concerns: Will publicly traded companies exhibit the same long-term commitment to clients as community-based providers? Many drew parallels to the nursing home industry, where the bankruptcy of several large corporate chains recently left the state stranded with thousands of elderly Californians and no one to care for them. (W. Bruce Lunsford, a member of ResCare's board of directors, is the former CEO of Vencor, a nursing chain that recently went bankrupt and that was fined $260,000 in 1998 for systematically discharging Medicaid clients, who earned the company $18,000 less on average than other patients.) Others worried that MENTOR and ResCare, which boast that they have hired off some of the best talent from state agencies, will use their connections and political clout to gain unfair advantages in winning contracts [see sidebar, "Insider Influence?"].

To be sure, some tax-exempt agencies are "not-for-profit" in name only. Nevertheless, many providers question how corporations can satisfy their shareholders without sacrificing care. "We're in the middle of a rate crisis," says Barbara Maizie, executive director of the ARC in Contra Costa. "Most of us have to raise hundreds of thousands of dollars in donations just to break even. So frankly, we're baffled that companies like ResCare can actually make money off these services."

ResCare insists its profits come from operating efficiencies, not reduced services. "We have lower administrative costs and more efficient management systems than many providers," says Jeffrey Cross. But the California nonprofits, having observed ResCare's and MENTOR's numerous acquisitions in recent years, suspect that both companies may be sacrificing earnings in the short term to expand their market share. "Eventually," speculates Laurie Shields, head of the ARC of California, "the state may come to depend on these companies for services. At that point, they can hold states hostage."

In Texas, ResCare's grip on services may already be holding the state hostage. Even after the Texas Department of Human Services detailed deficiencies in its homes "that are pervasive across the chain," ResCare continues to be a certified provider and runs more programs in Texas today than ever before. Why? "The problem is that we just don't have places to put people," explained a state source, who wishes to remain anonymous. "So we can't say, 'No, you won't run these facilities,' even if a provider has had problems, because Texas is committed to shutting down state institutions." On two occasions--back in 1995, and again after Trenia Wright's death--the state actually threatened to deny ResCare operating licenses due to chronic compliance problems, but each time, the company responded by filing suit (a tactic common among corporations contracting with government), and the state agreed to settle, on the condition that the company improve. Frustrated by ResCare's shoddy record, a 1999 report by the Texas Department of Human Services asked, "Would these facilities have continued with such a poor history of coming into compliance ... if ResCare had used their profits to improve their existing facilities instead of purchasing additional facilities?"

It's a reasonable question. Yet with an estimated 220,000 disabled people on waiting lists for residential services, and nearly half-a-million more living with family caregivers over the age of 60, ResCare's growth outlook--which is predicated on acquisitions and market expansion--has never looked brighter.

Alarmingly, however, as states expand their community operations, they are enrolling individuals in a new Medicaid program--known as the Home and Community-Based Services Waiver--that has virtually no federal standards and only limited oversight. The waiver program was launched in 1981 to offer a more flexible Medicaid reimbursement option to people living in the community (in three-person homes and single apartments, for example) who need a variety of individualized supports. But in numerous states, including California, the lack of oversight has prompted harsh criticism from the Health Care Financing Administration, the federal agency that administers Medicaid. "There is increasing reliance on unlicensed residential programs, which do not have to meet any standards," warned Clarence Sundram in a recent speech before the American Association on Mental Retardation. "What we are fighting is not the stark horrors of a Willowbrook that could easily galvanize even the most stone-hearted person. The risks are more subtle ones of isolation, neglect, and abandonment."

Stark horrors, perhaps not, but in dozens of waiver homes that ResCare opened recently in Indiana, conditions were shocking nonetheless. In the spring of 1998, ResCare struck a deal with Indiana to convert three of its large intermediate care facilities (ICFs), housing 116 clients, into numerous smaller four-person homes and individual apartments, financed under Medicaid's waiver program. "This community-based setting will allow your family member to grow as a person and as a member of his or her community," ResCare promised in a letter to parents. Soon, however, the Indiana Bureau of Developmental Disabilities Services (BDDS), which administers the waiver homes, was flooded with angry letters from parents, guardians, and case managers contending that medically fragile people had been thrust into inappropriate living situations without adequate care.

The problem? Documents obtained under the Indiana Public Records Act indicate that ResCare and the state reached an agreement to cap costs by establishing a $129 per-diem reimbursement rate for each client, regardless of medical need--a rate that effectively eliminated competition, since other community providers considered it too low to provide adequate care. They were right. No sooner had clients been relocated than the Indiana Protection & Advocacy Services (P&A), a federally funded agency that advocates for people with disabilities, began complaining about systemic staff shortages, a lack of transportation vehicles for clients to access the community, and the failure to implement behavior plans--all of which was later confirmed by the Indiana bureau. In April 1999, eight months into the transition, an Indiana bureau surveyor found inadequate staffing at three homes that should have been double-staffed; the surveyor questioned whether ResCare might be trying to make it appear that the homes were properly staffed by having one employee float between facilities. "Appointments are being missed and work on goals and objectives is virtually impossible when homes are not properly staffed," the surveyor complained.

Eight clients died in less than a year at ResCare's new homes, prompting questions about why the death rate was so high. "These were severely mentally retarded clients with multiple health problems who had previously had 24-hour-a-day nursing care," explains Dan Crooke, the former administrator of ResCare's northern Indiana operations, who resigned in June 1999. "Their deaths raise the question of whether it was right to move them into smaller homes where they were being served by minimally trained people and a nurse who stopped by once a week."

One factor contributing to the chaotic transition, says Crooke, is that ResCare tried to minimize costs by moving clients out of its large intermediate care facilities before the leases on these buildings expired on August 31, 1998. The company that owned these facilities, Omega, has filed suit, charging that ResCare surreptitiously evacuated the facilities without informing Omega, to prevent a competitor from taking over the lease and to ensure that most clients--and their Medicaid funding--would be transferred to ResCare's new community homes, even though clients ostensibly had the option to choose another provider. ResCare spokesperson Nel Taylor says that the lease had already expired and that ResCare dismisses the charge as a "landlord-tenant dispute." Nevertheless, state documents show that ResCare, scrambling to meet the August 31 deadline, temporarily put clients up in motels and its own employees' homes because many community residences were not ready on time. (One diabetic was placed in a mobile home with a former ResCare employee who was "let go" due to multiple allegations of abuse, a Protection & Advocacy Services investigator learned from several staff.) Others were placed in permanent homes that lacked wheelchair accessibility for months.

ResCare claims initial problems were caused by the failure of two contractors to modify homes on schedule, but that clients received "suitable accommodations." The company recently reached an agreement with the state to replace the $129-per-diem rate with a more flexible reimbursement system based on medical need, but insists that, even before, it "was diligent in its medical care of the individuals" in Indiana. "We draw a box around the essential services, and there is no gain to us if we were to cut back on those services or alter staffing ratios," says Jeffrey Cross.

A close look at one home in Sullivan, Indiana, however, suggests that holding down costs often trumped client needs. In this home, which housed four female clients with aggressive behaviors and mental health problems, the P&A and case managers found that serious client-on-client abuse went unreported, psychological and behavioral needs were not addressed, staffing was inadequate, and food was often missing from the shelves. One wheelchair-bound client couldn't access the toilet properly because only one staff person was frequently assigned to the home, even though ResCare's own "Person Centered Planning" report stated that the client required two staff to assist with transferring and lifting. As a result, the client was left hanging for hours in a Hoyer lift above the toilet (an experience that terrified her), or sometimes was simply found in her room "sit[ting] in feces or urine for up to hours," the P&A complained. The inadequate staffing persisted for months.

Initially, ResCare's Administrator Michael Smith told parents and advocates that the company "can't afford to put two people in the house," according to notes taken by a case manager (an independent contractor funded by Medicaid to serve as a client resource and advocate). Yet months later, ResCare informed parents that double shifts were being reduced because "additional staffing simply increases the noise level in the home at a time the ladies seem to enjoy solitude." An irate parent wrote back, "Just who do you think you're kidding? You already have had less staff than I was promised for some time... . You promised these homes would be like living in their own homes. What a farce."

Milo Gray, lead counsel at the Indiana P&A, shares the parents' frustration. "The trouble is, under the waiver program, a case manager may go into a home and find problems," he explained, "but because there are no federal standards, short of criminal law, there is no way to hold providers accountable." It's a problem that proponents of privatization rarely recognize: Handing over services to the private sector does not eliminate the role of government, but instead makes it all the more urgent that public agencies hold private contractors to welldefined standards. "When you cannot clearly measure the outcome in a government contract," notes Dennis Felty, an expert on government outsourcing of social services, "you end up allowing the for-profit entity to define the product--and the level of profit it can take out--for itself."

The Human Evidence

Unlike the waiver program, Medicaid's intermediate care facilities--group homes that generally have six or more clients--are subject to a host of federal quality-assurance standards and routine inspections. But interviews with former ResCare employees indicate that, even here, the company can, and does, evade regulations.

One evening last December, we visited the home of Terry Lockard, a former ResCare employee who used to work at the Memorial group home in Houston. "There was a girl there" who became ill in the spring of 1995, said Lockard, settling onto a stool in her living room. "She was an active, outgoing girl, just a great individual. But then she got sick. She started having diarrhea, throwing up her food, throwing up bile--it was real bad."

The client attended a day program, which was not run by ResCare, and workers there began asking Lockard to take her home. Lockard was dissuaded from doing that, she said, "because from 10:00 to 2:00 each day, there was no staff in the home. They didn't want to pay the extra hours for me to be there, so I was told to keep taking her to the day program."

Eventually, Lockard said, the day program grew so concerned that someone called Adult Protective Services, an independent monitoring agency, and ResCare received notice that state inspectors would be coming to investigate. "The night before they came, we were real busy," Lockard recalled.The reason, she said, is that staff should have been documenting a range of programs for clients--doing laundry, washing dishes, bathing with soap--three times a week. "Well, we never did," she said. "So that night, we were instructed to get the books in order."

Even more remarkable was what happened the next morning. "When the state came, I was instructed to go to the group home, pick up the client, take the individuals to the workshop, and take the client home with me," said Lockard, shaking her head at the memory. "I kept her there all day long, so that the state wouldn't have any contact with her. I had her until almost 8:00 that night."

Needless to say, state investigators discovered little, and the client's health worsened. "I would take her to Dr. Yalamanchilli--he would lift her arms, open her mouth, and say she's all right," Lockard said. One day, exasperated, Lockard dug through the client's medical files herself and discovered that she had been diagnosed with colitis, an inflammation of the colon that, if untreated, can be fatal. "She could have died from that infection," said Lockard, clearly upset. "So I took the files home, made copies, and turned them over to the day program."

"I know what I did may have been illegal," she explained. "But I'd do it again. I did it to save this client's life."

Lockard's rendition of this story was confirmed by another source who was with us in Lockard's living room, but who wished to remain anonymous. This source worked at the day program used by ResCare and said that she, too, was concerned that clients' medical needs went ignored, including one who complained of chronic stomach pain. "ResCare staff kept saying, 'It's just a behavior--she's fine.' Then she died of stomach cancer. She'd been trying to let people know for a long time."

Terry Lockard's account of "getting the books in order" before state inspections was likewise echoed by other former ResCare workers we interviewed. Rita Crosby, who worked as the QMRP (qualified mental retardation professional) at three ResCare facilities in Fort Worth, says, "My supervisor would actually brag about being able to go into any home and create charts for six people to pass state inspections." The reality, says Crosby, was rather different. "The conditions in those homes were absolutely deplorable... . There would be no food in the cupboards, the places were filthy... . Ninety-nine percent of the direct-care staff they hired were uneducated, inexperienced people who were getting paid minimum wage. But all they cared about was filling the beds and getting the Medicaid payments."

If Crosby sounds bitter, it's because working for ResCare, she says, nearly caused her to have "a nervous breakdown." Shortly after Christmas in 1998, a client who lived at the Cedar Oaks home was rushed to the hospital and died of what was officially labeled stomach blockage. "I went to the home and spoke to the clients," says Crosby. "They told me that Christy, the woman who died, had been sick and vomiting all day. There was vomit all over her bed covers, all over the bathroom, and along the walls, which indicated to me that this was not a sudden attack." Shocked by the death, Crosby says she informed her superior that she was reporting the incident because she suspected the direct-care staff had either left Christy unattended or had not responded to her cries for help. Although ResCare says it "demand[s]" that employees report any abuse or neglect, Crosby says she was discouraged by her supervisor from doing so. She eventually reported the incident on her own to the Texas Department of Health, she says--and then quit in protest.

To prevent such abuses, the federal government mandated in 1975 that every state establish a protection and advocacy agency to provide legal assistance and monitoring on behalf of people with disabilities. The P&As took the lead in filing lawsuits throughout the country to shut down state institutions. But when we called around to P&As in 10 states for this article, we found that--with the sole exception of Indiana--none could offer specific information on the quality of care in the large, for-profit chains in their states. Why? Some advocates say the reason is simply a lack of resources, but others contend it is also ideological. Because the P&As were so instrumental in closing state institutions, several advocates told us, they fear divulging anything, particularly to the media, that might reflect negatively on community-based programs.

Nowhere was this silence more disturbing than in Florida, where the state's P&A--known as the Advocacy Center for Persons with Disabilities--actually quashed a critical investigation into ResCare's operations. In March of 1998, ResCare acquired seven troubled group homes in the Tampa-St. Petersburg area, formerly run by Normal Life, in which three clients had died during a three-week period just prior to ResCare's takeover. The deaths prompted the Advocacy Center's monitoring unit, based in Orlando, to launch an investigation that, according to news reports at the time, was scheduled for release in May. Brenda Marcellino, then director of the monitoring unit, informed reporters that ResCare had repeatedly blocked the agency's access to clients and their records (an authority protected under the P&A's federal statute) and had done little to turn the facilities around. "We do not believe ResCare is the good guy galloping in," she cautioned.

Yet when we contacted the Advocacy Center to obtain a copy of this report, we discovered that not only had the new executive director, Pat Ware, blocked the report from being made public, evidently wanting to give ResCare more time to improve conditions; he had instigated a follow-up investigation in October of 1998, performed jointly with ResCare, which gave the facilities a clean bill of health. Also at this time, Ware shut down the monitoring unit, fired its director, and let go numerous other veteran lawyers and staff.

Had ResCare made dramatic improvements? In an interview, Ware said, "My impression is that ResCare has made a considerable investment, particularly in terms of safeguarding the health and care of the clients." But a review of close to 1,000 pages of state monitoring reports, obtained under the Florida Public Records Act, reveals that all seven homes were riddled with problems long after ResCare took over--problems that the monitoring unit's suppressed report, a copy of which we were able to obtain, accurately identified.

While the Advocacy Center applauded improvements at ResCare's homes, Florida's Agency for Health Care Administration, which monitors intermediate care facilities, found the homes wracked with deficiencies, including poor management, medical neglect, understaffing, improper employee background screening, and lack of active treatment plans. At several homes, state surveyors deemed the situation so serious that they declared "Immediate Jeopardy." At the Sadie home, where ResCare "failed to provide sufficient staff to meet the needs of six of six clients for an extended period of time," a woman in the "severely retarded category of intellectual and adaptive functioning" mysteriously sustained "a vaginal laceration, requiring surgery, in June of 1998." The alleged perpetrator was a ResCare employee who, a year earlier, had been suspended "due to allegations of a sexual nature" brought by the same female client.

In the end, the state of Florida moved to terminate four of these homes from the ICF program. ResCare, however, slipped out of the regulator's grasp by cutting a deal with the state and reopening several of the homes under the waiver program, where the company continues to receive Medicaid dollars and is subject to far less stringent oversight. Is this a pattern? Shortly after Texas shut down Appleridge, ResCare converted that home to the waiver program as well, where it currently operates under a newly acquired subsidiary, Educare.

Last December we visited a day program in Ojai, California, that is a model of what community care can be at its best. Located on a residential, tree-lined street, the facility, which serves 56 mentally retarded clients and has over 20 staff, consists of a series of workshops--for ceramics, computers, painting, and other activities--that are built around an open, sunlit quadrangle. In virtually every room, the clients were engaged in activities. One wheelchair-bound woman practiced physical therapy with a caregiver; next door, roughly two dozen clients gathered for an afternoon sing-along with a local guitarist.

"We opened this program because for years people had to get on a bus and drive 15 miles, to Ventura, for their day program," said Fred Robinson, head of the ARC of Ventura, as we toured the grounds. "We did it because our motivation is to improve the quality of life for people with disabilities who live in this community."

What Robinson and other nonprofit providers fear is that, as corporations take over the disabilities field, financial considerations will overshadow all else, leaving nobody to perform the advocacy and outreach that nonprofits frequently undertake because they are motivated by a social mission. "ARCs in the community do more than just provide services," explained Robinson. "We're a clearinghouse for information. We visit schools to educate the public about issues like fetal alcohol syndrome."

Sometimes, serving as advocates also requires the nonprofits to challenge the agencies they depend on for funding. Virtually every year, notes Barbara Maizie of the ARC of Contra Costa, the regional centers in California--which control the funding strings at the local level--attempt to reduce services. "So the providers face a choice: Should they go to testify against the cuts despite the risk of alienating their funding source, or should they stay silent?" asks Maizie. "For those of us who are mission driven," she explains, "we will go and appeal on behalf of our customers: the clients. But the large for-profits won't bite the hand that feeds because their principle customers are the funding agency and their shareholders."

Advocates of privatization counter that gains in efficiency outweigh these costs. But are corporations always more efficient? In a recent study published in the Journal of Economic Issues, William Van Lear, a professor at Belmont Abbey College, and Lynette Fowler, assistant director of business at Gaston Residential Services, found that nonprofits operating group homes for the mentally retarded in North Carolina were actually 7 percent more efficient than for-profit firms, as measured by the percentage of total revenue spent on direct services (rather than overhead and other indirect costs).

Where corporations do seem more adept is in squeezing the most out of their government contracts. In 1995 James Verdier, then assistant secretary for Medicaid policy and planning in Indiana, published a report showing that for-profit group homes used a range of sophisticated accounting techniques to bill Indiana $3.7 million more than their actual costs.

As we left the day program in Ojai, it was hard not to think back to an earlier, unannounced visit we paid to a day program in Houston that was recently opened by Adult Business Services, a ResCare subsidiary. Entering the facility, which was located in a busy shopping plaza, we found roughly 30 clients clustered in a single room with a bare cement floor. None was engaged in any activities or treatment programs, and not a single staff member was present in the room. Eventually, after we asked for a supervisor, one mentally retarded man motioned toward a door in the back, which opened onto a concrete lot outside. There, two staff members, who looked to be in their early 20s, were blowing up inflatable rubber balls while a group of 20 more clients lingered about aimlessly. This, it appeared, was to be the day's main activity.

"It's sad," says Janice Lacy when we described what we had seen. "A lot of these providers don't care about the people. They just look at them as a way to make money." ¤